Chapter 4
Chapter 4 In-Chapter Questions: 1. (Pg. 144)—What are the pros and cons of establishing a business presence in social media outlets? · Pros: By tapping into the powerful and far-reaching networks that social media sites can provide, companies are now armed with powerful tools to get their business name and brand out in front of the public quickly, at a much lower cost than traditional marketing methods. · Cons: The potential cost to the company is the damage created when a bad choice of words, an unpopular stance, or a rogue employee’s rant gets posted to the social media site. 2. (Pg. 144)—In what ways could social media possibly help jump-start a small company’s business in a competitive market? · Businesses are able to leverage social media platforms to attract new customers, build a following of loyal fans, generate potential contracts, build relationships, and create a buzz about future events or products, which will give them a competitive advantage over those companies that do not utilize social media. 3. (Pg. 144)—How would you forecast the future of social media as an opportunity for business? · We would forecast a very bright future for social media as an opportunity for business because that is the shift of the culture. Now that there are so many people on social media it would be a detriment to the business if they did not utilize these inexpensive marketing outlets to promote their business. 4. (Pg. 152)—What does a company do? · A company generates revenue. 5. (Pg. 152)—How does a company uniquely do it? · By creating a competitive advantage within a market. 6. (Pg. 152)—In what way (or ways) does the company get paid for doing it? · A company gets paid for doing it through traditional transactions, subscriptions, and commissions. 7. (Pg. 152)—How much gross margin does the company earn per average unit sale? · This depends on the company and the products or services offered. 8. (Pg. 153)—Why was the site so quickly successful? · The site was so quickly successful because Hurley and Chen designed the site exclusively for videos and for ease of use. When YouTube was launched, no one else had yet come up with an easy, fast method to electronically share videos that bypassed the usual process of attaching videos to e-mail messages. 9. (Pg. 161)—While employee monitoring practices may be legal, are they ethical? Since employers are expected to maintain a workplace environment free of sexual harassment, shouldn’t they be allowed to monitor e-mail messages that could implicate them in a sexual harassment suit? · They should absolutely be allowed to monitor e-mail messages that could implicate them in a sexual harassment suit. The law protects companies by stating company e-mail is not private, and can be viewed at any time without the employee’s consent. The book states, “business law and ethics experts agree that employers who monitor should do so only if the surveillance serves a legitimate purpose, should follow clear procedures to protect the worker’s personal life, and should inform workers about monitoring practices” (page 161). 10. (Pg. 175)—What are the biggest advertisers on the web? · In November 2009, Scottrade was the biggest advertiser on the web. It is followed in order by Sprint Wireless, TD Ameritrade, Scottrade Stock Brokerage, and Seroquel XR. 11. (Pg. 178)—What can we expect from the smart phone of the future? · Overall, the smart phone of the future will be more customized. It will have a touchscreen, faster Bluetooth, more GPS-powered applications, more memory, and a higher data transmission rate; some predict that smart phones will act as full PC replacements, using powerful processors that allow even complex applications to run. 12. (Pg. 179)—Describe a situation where you could have used ChaCha. · ChaCha can be used to answer any questions. A situation in which ChaCha would be useful would be when someone needs directions for a particular restaurant or destination. 13. (Pg. 179)—When do you think “old fashioned” search engines would be more effective than ChaCha? When would ChaCha be preferred? · Old fashioned search engines would be more effective when questions are really complicated or for conducting research. ChaCha would be preferred for common questions where the answer is simple, straight-forward, and is easy to understand. 14. (Pg. 184)—How can technology help brick-and-mortar retailers compete against e-tailers? · Technology offers convenience to customers by allowing them to save time and search online for products sold in the brick-and-mortar retail stores. If the customer likes what they see online, then they can go to the store, see it in person, and purchase it if it is what they are looking for. With e-tailers you have to look at the item online, order it, and wait for it to come in before you can see the item in person. If the item is not what you want, then you have to go through the return process and find the item somewhere else. 15. (Pg. 184)—Privacy advocates criticize the use of RFID, as it allows better tracking of purchasing habits. How can brick-and-mortar retailers alleviate these concerns? · They could have the RFID chips equipped to only track information for the store’s purpose, and not have the item linked to a particular customer. 16. (Pg. 184)—As you have read, some of the “human element” in retailing is being replaced by technology. How can brick-and-mortar shores avoid becoming too “sterile” when using information systems to compete against e-tailers? · They have to be flexible with technology, but also offer the person-to-person customer service that those customers are looking for. Amazon is great for online shopping, but customers typically do not interact with the person selling the item unless a question or issue arises, and when that happens, all of the correspondence is done via e-mail. There really isn’t a personal aspect to the transactions as there are if you go into a store. The time element is also a factor. Being able to hold a conversation about a particular item inside a store will yield much quicker results than waiting on an e-mail reply. Review Questions: 1. What is EC, and how has it evolved? · EC stands for electronic commerce. EC is very broadly defined as the exchange of goods, services, and money among firms, between firms and their customers, and between customers, supported by communication technologies and, in particular, the Internet. Online retail sales increased by 2 percent and EC accounted for 3.7 percent of total retail sales from 2008 to 2009. 2. How have the Web and other technologies given rise to a global platform? · The Web and other technologies have broken down the barriers to entry, leveled the playing field, and propelled commerce into the electronic domain. 3. Compare and contrast two EC business strategies. · Almost all companies that focus on B2C EC also engage in B2B EC in order to procure the inventory. · B2C deals with selling items directly to the customer, whereas B2B deals with one business receiving goods from another business for the purpose of resale. 4. Explain the differences between the Internet, an intranet, and an extranet. What is the common bond among all three? · Internet: External communication that is accessible to anyone with a connection. · Intranet: Internal communication that is only accessible by those authorized employees within a specific company. · Extranet: External communication that is only accessible by those authorized business partners. · The common bond between all of these is that they are means of communication. 5. List and explain three benefits of using extranets? · Information Timeliness and Accuracy: Reduces the number of misunderstandings within the organization as well as with business partners and customers. · Technology Integration: Disparate computing systems can communicate with each other provided that standard Web protocols have been implemented. · Low Cost-High Value: Do not require large expenditures to train users on the technologies since many employees, customers, and business partners are familiar with the tools associated with the Web. 6. What are the three stages of B2C EC? · E-information: Providing electronic brochures and other types of information for customers. · E-integration: Providing customers with the ability to obtain personalized information by querying corporate databases and other information sources. · E-transaction: Allowing customers to place orders and make payments. 7. Describe the difference between SEO, search marketing, and sponsored search. · SEO: Search engine optimization is used by companies in an attempt to move up in the organic search engine results · Search Marketing: Search marketing includes paid search and search engine optimization. It is the practice of trying to increase a company’s visibility in search engine results. · Sponsored Search: Sponsored search is also known as search advertising and is an attempt to ensure that a company’s Web site is the first site a user sees when searching for a specific term. 8. List and describe six elements of or rules for a good Web site. · Rule 1: The Web site should offer something unique · Rule 2: The Web site must be aesthetically pleasing · Rule 3: The Web site must be easy to use and fast · Rule 4: The Web site must motivate people to visit, to stay, and to return · Rule 5: You must advertise your presence on the Web · Rule 6: You should learn from your Web site 9. List and describe three emerging trends in C2C EC. · Bartering: Exchange for goods or services without using money · Auctions: Sale where goods go to the highest bidder · Tendering: Offer money for goods 10. Explain the different forms of online auctions. · E-auctions: Provide a place where sellers can post goods and services for sale and buyers can bid on these items or vice versa. · Forward Auctions: The most common; the highest bidder wins · Reverse Auctions: Where buyers post a request for a quote, which is similar to a request for proposal in that the sellers respond with bids and the seller with the lowest bid wins. 11. Describe m-commerce and explain how it is different from regular EC. · M-commerce or mobile electronic commerce refers to electronic transactions using a wireless device and mobile networks whereas simply E-commerce refers to the exchange of goods, services, and money in an online environment. 12. What are the primary forms of e-government? Provide examples of each. · Government-to-Citizen: Interactions between federal, state, and local government and their constituents. An example of this would be e-filing your federal tax returns. · Government-to-Business: Involves business relationships between all levels of government. An example of this would be online application and procurement of certain licenses, such as export licenses. · Government-to-Government: This type of EC is used for electronic interactions that take place between countries or between different levels of government within a country. Examples of this would be Regluations.gov and Export.gov where information can be accessed regarding laws and regulations relevant to federal requirements. Another example would be intergovernmental collaboration at the local, state, federal, and tribal levels. 13. How does taxation pose a threat to EC? · Governments are concerned that sales made via electronic channels have to be taxed in order to make up for the lost revenue in traditional sales methods. Due to the passing of the Internet Tax Freedom Act of 1998, taxes can only be obtained from the seller if the sale is made in the state where they have a substantial presence. Self-Study Questions: 1. EC is the online exchange of _____ among firms, between firms, and their customers, and between customers, supported by communication technologies and, in particular, the Internet. · D—All of the above § Goods, services, and money 2. ______ are those companies that operate in the traditional, physical markets and do not conduct business electronically in cyberspace. · A—Brick-and-mortars 3. A ______ describes how a firm will earn revenue, generate profits, and produce a superior return on invested capital. · C—Business model 4. According to the text, the three stages of Web sites include all of the following except ______. · A—E-tailing 5. The revolutionary aspect of the Priceline.com Web site lies in its ______ system called Name Your Own Price. Customers specify the product they are looking for and how much they are willing to pay for it. · D—Reverse pricing 6. ______ is a type of e-auction fraud where bidders are lured to leave a legitimate auction in order to buy the same item at a lower price. · A—Bid luring 7. A Web site should _____. · D-All of the above § Be easy to use and fast, offer something unique and be aesthetically pleasing, and motivate people to visit, to stay, and to return. 8. C2C EC can be categorized according to _______. · B—The number of buyers and sellers 9. Trying to “outsmart” a search engine to improve a page’s rankings is known as ______. · B—SEO 10. According to the Internet Tax Freedom Act, e-tailers ______. · D—Have to collect sales tax only from customers residing in a state where the business has substantial presence. Assigned Questions: 1. Match the following terms with the appropriate definition: i. Search marketing (a)—The practice of trying to increase a company’s visibility in search engine results. ii. Electronic data interchange (b)—The digital, or electronic transmission of business documents and related data between organizations via dedicated telecommunications networks. iii. Web analytics (h)—The analysis of Web surfers’ behavior in order to improve a site’s performance. iv. Paid inclusion (i)—The practice of paying a fee to be included in a search engine’s listing. v. E-transaction (d)—A stage that takes the e-integration stage one step further by adding the ability for customers to enter orders and payment online. vi. Long Tails ©—A business model focusing on niche markets, rather than purely on mainstream products. vii. Supplier portal (j)—A subset of an organization’s extranet designed to automate the business processes that occur before, during, and after sales, have been transacted between a single buyer and multiple suppliers. viii. Search engine optimization (g)—Methods used to improve a site’s ranking. ix. E-government (f)—The use of information systems to provide citizens and organizations with handy information about public services. x. E-integration (e)—A stage in which Web pages are created on the fly to particular needs of a customer. 3. Search the Web for a company that is purely Web based. Next, find the Web site of a company that is a hybrid (i.e., they have a traditional brick-and-mortar business plus a presence on the Web). What are the pros and cons of dealing with each type of company? Purely web based companies operate with less of a personal service because everything is located online, but provides high convenience by allowing the customer to purchase products or services online. A hybrid company allows customers the convenience of online shopping, but also allows customers to view products in person. The con of dealing with a hybrid company is that there may be differences in what can be viewed online and in the store because of a delay in updating the website. 10.. Go to Amazon.com’s affiliate site. How does affiliate marketing at Amazon.com work. How do Amazon.com business partners get paid? Who can sign up for this service? The affiliate program is an arrangement in which an online merchant web site pays other web sites a commission to send them traffic. These affiliate web sites post links to the merchant site and are paid according to a particular agreement. In the case of the Amazon affiliate program, the affiliate web sites are paid a commission on sales that their links produce. When a person visits Amazon from one of your links, Amazon will pay a commission from that sale. The amount of commission is on a sliding scale depending on what type of items are sold and how much is sold. Amazon pays its affiliates on a monthly basis. After approximately 60 days after the end of each month, the affiliates will receive payment. The affiliate can choose to be paid by check, direct deposit or with an Amazon.com Gift Certificate. It seems that anyone may apply to the program. You will obviously need a website from which traffic can be generated. 11. Visit www.firstgov.gov. What kind of services do you see that would help you? What services would you use? What areas are missing? · Several services on this website would be helpful. This website allows users to search for government jobs, change their address, and shop government auctions just to name a few. We would use the link to search for the cheapest gas prices in our area. It is difficult to think of an area that is missing because the website covers a broad variety of topics. Assigned Case #2: 1. Do you use YouTube? If so, what is your favorite type of content? If not, why not? · I generally only watch music videos on YouTube. There are some instances where a professor may upload a lecture or video for us to watch, but other than that mostly music videos. 2. How can businesses use YouTube to promote a good brand image? Have you seen any “good” campaigns on YouTube? If so, what made them appealing? · Businesses can use YouTube to promote a good brand image by creating videos for their company, posting commercial ads before videos or ads on the pages with links to their business website. Good campaigns on YouTube are appealing when they are placed in front of popular videos and catch the viewers’ attention prior to the allowance of the viewer to skip the ad, which can sometimes be only a few seconds. Good campaign commercials are usually filmed in good quality with exciting music or video footage. 3. What potential dangers for a business’ reputation can arise from user-generated content posted on sites such as YouTube? How can a business react to such dangers? · The potential danger would be that a user posts inaccurate or altered content about the business to YouTube. If the material they use and post is copyrighted, the business can file suit for copyright infringement.